While March 15, 2025 was the last date to pay advance income tax for FY 2024-25 but you can still pay the last quarter’s due advance tax. This payment will attract interest under Section 234C. However, despite this interest amount you will end up paying less than what you would pay after 31 March. In case you do not pay the last quarter’s advance tax by March 31, 2025 then additional interest under Section 234B will also be levied from April 1, 2025. Advance tax has to be paid by every taxpayer whose total tax liability is above Rs 10,000 in a financial year.
To save on unnecessary interest cost, you must pay it now if possible.
What happens if you pay advance tax after March 15, 2025 but before March 31, 2025?
Interest under Section 234C needs to be paid if you are paying advance tax after the deadline of March 15, 2025. Under Section 234C interest at 1% rate per month or part of the month on the amount of deferred tax needs to be paid if the advance tax is paid after the deadline is over.
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How is interest calculated under Section 234C for shortfall in payment of advance tax?
CA (Dr.) Suresh Surana explains that under Section 234C if the advance tax paid by the taxpayer on or before March 15, 2025 is less than the tax due, then, the taxpayer shall be liable to pay simple interest at the rate of one per cent on the amount of the shortfall from the tax due.Surana explains using an example:
75% Tax liability paid off through advance tax on or before December 15, 2024. So the next installment (due by March 15, 2025) ideally bring the total payment to 100%. However, if the remaining 25% is paid on March 17, 2025, there is a delay of 2 days beyond March 15, 2025.“For the last quarter (i.e. March 16 – March 31, 2025), since the balance 25% was not paid by the due date i.e. 15th March 2025, interest at 1% shall be applicable on this shortfall for a period of 1 month and not 4%,” says Surana.Aditi Goyal, Tax Partner, Trilegal, agrees with Surana and says, “In this case the balance tax is deposited on 17 March 2025, the interest liability u/s 234C would be restricted to 1% of the shortfall.”
“If someone has paid 75% of their advance tax liability on or before December 15, 2024 but paid the remaining 25% after March 15, 2025 but before March 31, 2025 say March 17, 2025, then it will be treated as delay in payment of advance tax for the last quarter and will attract interest at the rate of 1% as per the provisions of Sec. 234C(1)(A)(ii) of the Income Tax Act, 1961,” says Chartered Accountant Aastha Gupta, partner, S.K Gulati and Associates.
Mihir Tanna, associate director, S.K Patodia LLP says: “If someone does not have the money to pay the advance tax amount in full, then I would suggest to pay whatever money that could possibly be arranged be paid. Doing this will reduce the interest cost (Section 234C) by that much amount which was paid on or before March 15.”
What happens if you fail to pay the due tax after March 31, 2025?
Once March 31, 2025 passes, then interest under Section 234B will be levied, provided the taxpayer failed to pay off at least 90% of the total tax liability.
“Interest u/s 234B will be charged if a taxpayer fails to pay at least 90% of the total tax liability after relief as advance tax. The interest is computed at the rate of 1% for every month or part of a month comprised in the period from 1st April of the assessment year to the date of determination of total income u/s 143(1) on the amount which the advance tax paid as aforesaid falls short of the assessed tax. Hence it is requested that interest u/s 234B is computed correctly by the taxpayer at the time of filing return of income,” stated the Income Tax Department website.
Goyal from Trilegal says that it must be noted that advance tax can only be paid during the financial year. Therefore, any tax paid after 31 March i.e., after the end of the relevant financial year, would not qualify as advance tax. “If a taxpayer voluntarily deposits tax for AY 2025-26 on 2 April 2025, such tax would generally be considered as self-assessment tax,” she says.
Goyal explains using an example:
A taxpayer’s 75% tax liability is discharged through advance tax on or before December 15, 2024 but he/she failed to pay the balance advance tax liability by 15 March 2025. Instead the due tax is paid on April 2, 2025.
In this example, he / she would be liable to pay interest under Section 234C on the shortfall at the rate of 1% and interest under Section 234B also. “Therefore, where self-assessment tax is paid on 2 April 2025, interest for one month at 1% would be levied under section 234B (assuming that the balance tax liability for AY 2025-26 would be discharged in entirety on such date). This would be in addition to the interest of 1% for one month charged under section 234C, as mentioned above,” says Goyal.
